Gen Z and millennials are foregoing or putting off a key part of the American Dream thanks to skyrocketing costs and low wages
Forever renters: Gen Z passing on home purchases for luxury apartment rentals
FOX Business ‘Big Money Show’ hosts Jackie DeAngelis and Brian Brenberg discuss a new study that found Gen Z would rather pay high rent than put a down payment on the house.
Student loans, high mortgage rates, low wages – it's easy to see why buying a home can be challenging right now, but perhaps some younger Americans have found a solution.
According to a report from The Washington Post, living with parents while saving up for a down-payment on a home has become many young Americans' approach for navigating the unstable housing market more safely than before, making sure they are in a stable enough financial situation before taking the daunting leap.
Indian Head, Md., Mayor Brandon Paulin is one of those who waited for a chance at self-sufficiency, living with his parents to save money while watching his friends move away and begin their independence a bit sooner, according to the outlet.
A "for sale by owner" sign stands outside a home in LaSalle, Illinois, U.S., on Friday, June 7, 2013. (Daniel Acker/Bloomberg via Getty Images)
But the sacrifices paid off when he and his wife were able to afford a down payment on a 2-bedroom home.
"It wasn’t the conventional way to buy a house," Paulin said in the report. "But it’s what worked for us."
It's no secret the cost of home buying has skyrocketed in recent years.
Orlando-based realtor Freddie Smith told Fox News' Laura Ingraham in August that the challenge came in part from high interest rates which, at the time, were approximately 7.23% for a 30-year fixed mortgage. As of Saturday, the rate is approximately 7.09%, according to Bankrate.
"In 1970, the average home was $15,000. Now the average home is $436,000. It has gone up 29 times," Smith said in a viral TikTok video.
He told Ingraham during an appearance on "The Ingraham Angle" that the average home in America cost approximately $260,000 and interest rates were 4% in 2019.
"You could make about $60,000 a year and qualify for a home back in 2019," he said. "That same home today [August 2023] is going for $436,000, but the interest rates are seven-and-a-half percent…"
But other factors play into younger Americans foregoing homeownership.
According to Investopedia, American millennials are also likely to marry and have children later than previous generations, a decision which also keeps them home with parents even longer.
"Life events such as getting married or having children are typical triggers to buying a home. The longer this age group lives with parents or independently, the more homeownership will be delayed," Bank of America said in a report on Millennial home buying trends, according to the outlet.
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Combine that with tight criteria and crippling student debt – a controversial subject in recent years as loan payoffs circulate in conversations – and the recipe leaves many among the generation to play it safe until they find some semblance of financial stability.
It's among the latest trend for younger Americans trying to navigate a challenging economy, following on the heels of other home buying and renting trends that signal Zoomers (Gen Z) and millennials are changing with the times.
A recent study on Zoomers, for instance, found that a majority are shirking off homeownership in favor of forking out high rent costs.
A Wall Street Journal report from last month coined them as "forever renters," noting that these young Americans looking for their dose of independence could be shelling out massive sums for rental spaces.
But Jessica Lautz, deputy chief economist and vice president of research at NAR, noted renting is financially detrimental.
"The cost of renting a place is very prohibitive for young adults," she said, per The Post. "And they may have decided during a pandemic: Why should I rent? Why don’t I just live at home?"
The economy weighs heavily on all generations' minds, however, particularly as the 2024 election cycle heats up.
According to a recent Fox News poll, 78% of voters say the economy is in bad shape, with 93% of Republicans, 85% of independents and 61% of Democrats agreeing with the rating.
Sixty-four percent of voters polled said their own personal financial situation is either "fair or poor."
Fox News' Dana Blanton contributed to this report.
Taylor Penley is an associate editor with Fox News.
